Lawsuit Filed Over Liquor License at Garces Trading Co.

Editor's Note: Jenny DeHuff, the author of this story, is dating Terry Leach, general manager of Time. Time, Vintage and Bar, owned by Jason Evenchik, is a member of the restaurant coalition that has filed a lawsuit against the Pennsylvania Liquor Control Board. The individual owners, not the restaurants themselves, are named as plaintiffs. Leach is not affiliated with the lawsuit.

The brow-raising “sweetheart” deal between Jose Garces and the Pennsylvania Liquor Control Board has been the subject of rumblings in Center City since February, when the Iron Chef opened the only establishment in the city where consumers can purchase wine and spirits at lower cost, right from their comfortable seats at the Garces Trading Company.

Last week, the noise intensified when a group of feisty business owners filed a civil complaint against the PLBC’s arrangement with Garces Trading Company, the half restaurant, half state store nestled in the heart of Washington Square West, at 1111 Locust St.

On June 21, members of the Coalition of Restaurant Owners for Liquor Control Fairness (CROLF), a compilation of restaurant owners who operate licensed and BYOB restaurants within a quarter-mile of Garces Trading Company, filed a lawsuit against the PLCB.

“It is illegal, and it’s truly anti-competitive,” says CROLF attorney Dave Kwass. “Ultimately, the success of Garces Trading Company necessitates that other businesses can’t compete with it—that there are fewer consumer options, not more,” he says.

“I can literally plant my tush in Garces Trading Company seats and buy alcohol from the PLCB. Anybody who thinks we can compete with that doesn’t understand restaurant economics at all.”

Kwass says the group wants the liquor operations “shut down, suspended and, on a longer-term basis, the physical space be divided by a wall, as opposed to on the same footprint and premises.”

State Rep. Babette Josephs, whose district encompasses much of Center City, says the PLCB’s partnership with Garces is—to say the least—a conflict of interest.

“Because the liquor board picked and chose between restaurants and bestowed on only one …the favor of allowing them to have this arraignment, where diners can buy liquor and drink it at a low price, that makes the playing field un-level for other restaurants,” Josephs says. “I have nothing against Garces, it just doesn’t seem fair to me that the agency doing the regulating picks and chooses between entities that it regulates.”

While restaurateurs have been chastising the relationship between Garces and the PLCB for a while now, the lawsuit actually stems from Gov. Ed Rendell’s veto of Senate Bill 81, legislation that would have made several amendments to the liquor code and prohibited a PLCB store from sharing an interior space with another business, unless that business prohibits the consumption of alcohol on its premises. As for the already-done deal with Garces, terms of the bill state that his contract would not be renewed after its expiration date of January 2015.

In a veto message to the state Senate, Rendell said that prohibiting such an arrangement between a responsible business owner and the liquor board “impedes the modernization of alcohol sales in our Commonwealth.”

The governor went on to say, “In order to further bring Pennsylvania’s liquor sales practices into the 21st century, we need to encourage innovative PLCB programs and foster new and novel, progressive yet responsible ways to reach customers more easily.”

In a letter to P.J. Stapleton, chairman of the PLCB, Kwass warned the board of the risks involved with the state going into the restaurant business.

Since there was no open solicitation for bids, Kwass says it appears to be another example of covert, preferential contracting by the PLCB.

“What is shocking and surprising is that we would have been able to address these concerns, at least to the extent of maybe, 95 percent, with Senate Bill 81, and somehow, somebody got to the governor and got him to veto it.”

State Rep. Robert Donatucci, a Democrat in the 185th District that serves Philadelphia and Delaware counties, is chairman of the House’s liquor board committee. As a supporter of the bill, Donatucci says he was disappointed to see it squashed after it had passed successfully through the house and senate with majority approval.

“It’s wrong that you have an establishment that pays dearly for a liquor license, and then you have a restaurant that’s a BYOB, and for some reason, the PLCB can come in an open a store in there,” says Donatucci.

“Basically, we’re subsidizing their business,” Donatucci says. “And in a lot of cases, (the state) is paying rent to those places to have their store in there.”

Neither P.J. Stapleton, whom Rendell reappointed to his post early in the administration, or Jose Garces returned PW ’s calls or emails asking for comment.

COMMENTS

Comments 1 - 9 of 9

1. William DeHuff said... on Jun 30, 2010 at 06:28AM

“Great article, Jenny,Keep up the good work!”

2. Anonymous said... on Jun 30, 2010 at 08:42AM

“There are a lot of broad, unsupported statements in this article. It implies that the wine being sold is cheaper than what is sold in other state stores, which is false from my understanding. Anyone (and I have) can walk in, buy wine, and take it to another restaurant. It is literally just another store to buy wine in this hood, and while it's most convenient for someone who wants to eat at GTC, it actually HELPS other BYOBs by providing another outlet to buy wine. And as for those restos that "pay dearly for liquor licenses", this Garces location doesn't reap the benefits of alcohol sales like places that SELL alcohol. Much ado about absolutely nothing, except people trying to maintain the status quo. Tough.”

3. Consuelo said... on Jun 30, 2010 at 12:25PM

“This is just a few sore losers. Tough luck. Pennsylvania and PA restaurants need this to happen one way or another. Nothing to see here. Moving on.”

4. Anonymous said... on Jun 30, 2010 at 12:32PM

“Why not just get rid of the PLCB? When you add up their inflated prices, rude customer service, awful hours of operation, plus the ridiculous 8% sales tax; it makes sense to drive 10 minutes across the bridge to Jersey. Or drive 1/2 hour to Delaware -- with more selection, lower prices, and no sales tax.”

5. Anonymous said... on Jun 30, 2010 at 01:48PM

“The article doesn't suggest that wine can be purchased cheaper than at other state stores - but at other nearby restaurants.I am all for changing the liquor laws in this state to make them less archaic but this does seem an unfair business practice on the part of the PLCB. I don't fault Garces in all of this, he saw a good opportunity and took it - as any good business man would.

Opening liquor stores in grocery stores is one thing - but grocery stores don't have table service, they aren't restaurants. GTP does have table service and is undoubtedly a restaurant.

The PLCB is now competing directly with its clients. Every restauranteur in the state has to buy their liquor from the PLCB and resell it. The PLCB can now partner with a famous chef and open a restaurant? Come on, this doesn't strike anyone as anticompetitive?

You can have a nice meal, apps and entrée and enjoy a nice glass $12 glass of wine at Tria or you can have the exact same experience at GTP but buy the whole bottle of the SAME wine at the same price that the restaurant paid.

If this trends the PLCB would (by all rights) have to either buy back all the liquor licenses or let licensees buy wine and liquor at a sizeable discount in order to allow existing restaurants to compete fairly.”

6. AVB said... on Jun 30, 2010 at 04:19PM

“You can tell by all the inane actions of the PLCB they don't have a clue how to run a $1.8 Billion business. Appointing political cronies to cush jobs is not anyway to get things done properly. The level of incompetence is absolutely astounding.”

7. Anonymous said... on Jul 1, 2010 at 07:29AM

“Tria's owner David Kwass sues other restaurants and bars and then takes the money and opens Tria. That sounds parasitic to me and is the reason I Boycott Tria. Look at him brag here about suing other bars for millions http://www.smbb.com/news/pdfs/dining.pdf”

8. oenophile said... on Jul 1, 2010 at 07:42AM

“Hey anonymous, what a huge lie ..."You can have a nice meal, apps and entrée and enjoy a nice glass $12 glass of wine at Tria " Since when? Tria's food tastes like a highschool cafeteria and they serve their stale wines 20 degrees too warm and four times over their cost. TriaL is disgusting and can't handle competition”

9. Anonymous said... on Jul 1, 2010 at 11:06AM

“^ i don't think that's the point of the post. your personal opinion on the quality of the restaurant doesn't detract from the overall message. feel free to substitute tria with any restaurant that doesn't offend your sensibilities.”

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